Hemlo stakers not forgotten

Corona (TSE) and Teck (TSE), victors in Canada’s richest lawsuit for control of the Williams gold mine at Hemlo, have not forgotten an old handshake.

Both companies have given a net smelter royalty on gold production from the Williams mine — Canada’s largest — to Donald McKinnon and his associates, Toronto lawyer Rocco Schiralli and Claude Bonhomme. McKinnon, one of Canada’s best known prospectors, was grubstaked by Schiralli and Bonhomme in 1980. McKinnon’s work with prospector John Larche led to the staking of the original Corona and Goliath claims which today are the sites of the David Bell and Golden Giant gold mines.

In testimony given by McKinnon at the trial between Corona and LAC Minerals (TSE) in 1985, he said that he tried to buy the Williams claims on Corona’s behalf. The court ruled that LAC was able to purchase the Williams claims by using confidential information provided by Corona, leading to a breach of LAC’s fiduciary responsibility to Corona.

McKinnon’s testimony was considered a key element behind Corona’s stunning courtroom victory for ownership of the mine. Murray Pezim, Corona’s chairman in 1981 who is credited with financing the Hemlo discovery, said that McKinnon “would be taken care of” if the Williams property ever came into the Corona fold.

Nine years later, Pezim’s word was honored by both Corona and Teck, which equally own the David Bell and Williams mines. “It was an honorable handshake,” Corona President Peter Steen told The Northern Miner. The three partners will receive a 0.75% net smelter royalty which, based on annual gold output of about 520,000 oz., translates to 3,900 oz. of gold. At $465 per oz. of gold, that’s $1.8 million per year.